We'll move on to our next session of the day. Next, I'd like to welcome the team from Ameriprise, Jim Cracchiolo, Chairman, CEO, and Walter Berman, the company CFO. 2015 was a little bit of a tougher year for the stock with the choppier macro backdrop and concerns around DOL's fiduciary duty standards. That said, Ameriprise continued to drive solid earnings growth through growth in client assets, continued margin expansion, and still one of the best capital return stories within the capital market space. Today we'll get an update on how the firm is navigating today's environment, and hear management's thoughts on 2016. Thank you both for being here.
Thank you.
I was hoping to just kick things off with a general update on the business from you, Jim. Given the fairly uncertain macro environment, I was hoping you could focus a little bit more on how the retail investor is responding to still near-record equity markets, slightly widened credit spreads, potentially higher interest rates in the near future. Put it all together for us across Ameriprise's businesses.
Well, first, I want to thank you all for being here. I would just give you a little background context, because I think it's important for how we think about the world today and how we think about the investor. Ameriprise actually in September celebrated our 10-year anniversary as an independent public company. Over those 10 years, we've dealt with a lot of change, from both separating ourselves and becoming public to dealing with the financial crisis to a number of acquisitions. Through it all, we've stuck to our core strategy, and that core strategy was really to build out and further develop our wealth management business and actually establish ourselves as a global asset manager. As I look out over the next 10 years, we're very focused on continuing that.
Even though we're going to have near-term volatility, we're going to have issues of whether it's regulatory regime or market forces or the economies around the world having an impact here at home, we actually feel we're situated very well, and the foundation we have in place gives us a lot of opportunity to navigate. In our wealth management business, Alex, as you know, we've invested a lot. Hundreds and hundreds of millions of dollars, built out our brand, built out our technology, our capabilities. Really reaffirmed our real focus around advice and the financial planning that we think is critical as you think about the future for the average retiree, as you think about people accumulating wealth and satisfying their life goals. We're continuing to invest on that path. We continue to see good client inflows. We continue to see good advisor productivity growth.
We continue to see good advisors join us and actually really warming to the idea of that type of focus. With that as a backdrop, this year, we continue to see good client inflows. More recently, what we're seeing is a bit more buildup in cash. We see a bit more where people aren't necessarily looking to put everything to work immediately. They're trying to sort out what the issues and implications are with the market volatility. The flows are still coming in. The clients are still very much engaged. The clients are still, and advisors are still having them really focus on not reacting to the current market, but thinking through that market, just like they had the effect even going through the financial crisis. We continue to see good activity there, but it slowed a bit in the third and fourth quarter.
Naturally, our cash balances are a bit up, the total flow picture is still good and strong, and productivity is still there. I think when you think about the interest rate environment, very clearly, we all, and I don't think the consumer's any different, that wants to get it off the floor. They want the CD interest come back. They want to actually get paid for some of their cash and what they're thinking about for short-term investments or long-term investments. I think what we've seen is naturally our advisors moving to the shorter end of that spectrum. That fixed income is still a very important part of a balanced allocation in portfolios. They haven't pulled away from fixed income, but they've actually lightened up a bit. They shortened the duration.
They've actually moved into certain of their portfolios and the instruments that they're using in a way that they could navigate that and have good liquidity. Very much so, we continue to see a clear path forward that people are still planning for the future. They're still looking to say, "How do I actually retire and live at 30 years?" Nothing's changed based on short-term market conditions in that regard.
Sticking with the advice and wealth management channel, we'll spend a couple of minutes on that, given how important of a driver it is for the rest of your business. Ameriprise had quite a lot of success in recruiting over the last couple of years, and you made a couple of strategic changes, obviously, to the channel, the type of advisors that you're recruiting. When you think out for the next couple of years with the prospects of higher interest rates, arguably the profitability of those advisors to the brokerage firms will be significantly greater given how much money they can make on the cash. How do you envision competitive landscape evolving for recruiting, and specifically with your ability to move upmarket? I know that's been an area of growth for you guys.
Well, I would say the market today is very competitive for recruiting. In fact, I don't see it necessarily fundamentally changing in that regard. I see more of people becoming more aware of what their options are and what is most appropriate for them in a firm that they want to associate with. The reason I feel very good about that pipeline continuing is we're getting a lot more known out there. We're getting to have the right capabilities so that we can actually recruit very well. We can onboard very well. People are becoming a lot more aware that Ameriprise is a great alternative. Remember, we never recruited. It wasn't up until five years or six years ago that we started in this business, and we were novices in that sense.
Not novices in building an advisor network, we've always done it organically, but novices in a sense that we're going in to get really experienced people and bring them on board. What we've found is this year alone, it's not just the number up, but the average productivity of the advisor we're bringing in is an all-time high. We're seeing now more and more million-plus dollar producers that want to come over with their teams. The reason for that, I think more so is our focus really is the core part of who we are. It's the brand we use in the marketplace. We build the company around how we do business with the advisor and the client. We look for those to satisfy the advisors on what they need to accomplish to grow and be productive. The company really reinforces that value proposition.
On one hand, you got a very strong company, strong capital position, good capabilities that we can invest and build out that brand and continue to put ourselves in the marketplace. On the other side, we allow them to either associate as an employee with all that support or as a franchisee, and they still get the combination of factors that Ameriprise brings. Those two combinations together with the understanding that our leadership, including from me all the way down, cares for that advisor. We're going to make that the most important thing that we do and the way we position ourselves to satisfy the advisor's obligations, I think is a win-win for the advisor.
Makes sense. Focusing on margins. This has again been a huge focus area for investors, and you guys surpassed, I think, your own expectations on that front a number of times. When you think about the two different channels, there's an employee channel and the franchisee channel, as you guys articulated very well. The employee channel, I think is still somewhere in the 12% or so, and the franchisee channel is in the high teens, 18%-19% or something like that. Over time, you talked about convergence in those margins, meaning the employee channel will obviously move up to reach closer to franchisee part of the business. In a flatter market environment, how long do you think it'll take you guys to get there? Should we think about the pace of margin expansion continuing on the same path as we've seen over the last couple of years?
There's just a natural slowdown given how much you've already built out?
Well, I think if markets slow or continue to sort of bounce along on a more even keel without necessarily rising, that always puts pressure if you're looking for margin appreciation per se, that one of the winds that you usually have is mark. On the other side, if interest rates start to climb a bit, that will more than offset that in the short term. From a core organic build and productivity, I think you'll continue to see an increase in productivity in the employee channel. Just like in the franchisee channel, I think with that productivity, the more utilization of our fixed cost and our overhead in the employee system, the ramp-up of the recruits that we're bringing in with that pipeline continuing to be strong. I think you'll continue to see accretion in those margins even without the market.
If you look at it and say, okay, if you assuming equity markets don't rise as quickly, but interest rates start to kick in, that should more than offset it on one end. The core productivity and the core of that channel continues to improve and grow. One of the things that you're probably not as aware of is we still have internal transfers from an employee system for some of the organic legacy people that we built. When we originally recruited them and developed them, we always wanted them at that point in time, and this is years ago, to migrate. Some of them are still migrating that are pretty productive. You lose some of that margin in the channel. It stays within the system, but it moves over to the franchisees.
The franchisees always has a little more wind than the employee because you're making up for it. We're more than offsetting that transfer based on the new people coming in. They just got to ramp up because you're taking some current productivity and moving it over. That transfer has slowed over the years as we've continued to migrate, but it's still a little piece of it. That margin of 12 that you're looking at, 10, 12, whatever.
would be higher if those people had stayed in the boat there. It's still within my system. It's just that it moved from channel to channel.
Got it. Makes sense. Shifting gears a little bit, I would like to spend a few minutes on the asset management business. It's been kind of work in progress, I think, for the last couple of years. Flows most recently for the industry obviously have been very challenged. For you guys, they've been challenged as well. Some of that is performance related. Some of that it's related to some of the legacy issues, whether it's U.S. Trust, or some of the other Bank of America related issues. Taking a step back, assuming performance is reasonable.
Can you help us ring-fence the remaining risks in the Columbia channel, particularly on the retail side? That's where most of the problems are.
I think what I would first say is I think our performance right now as we've evaluated is quite strong on mainly across our product groups, both domestic and international, Threadneedle and Columbia. The one underperforming that we did suffer outflows from is our Acorn fund. I think that performance is now turning around. That has caused us really sort of a major outflow that has affected the business. Other than that, to your point, the only other things that are a little lumpy recently is some of your institutional investors, they're looking to raise some liquidity. They're looking to reallocate right now because of the market volatility. That pipeline still remains. It's actually the strongest it's ever been. We think over time some of that will come back.
We haven't been necessarily as affected as some of our competitors in the amount of those outflows coming from a certain region of the world, et cetera. That then says what's happening in our core retail businesses. If we look at the international businesses, retail is starting to pick up again. It goes through a level of volatility as you saw through the summer months, I think that there is there and will come back. In domestic, we actually over the last year, and it's hard to see it with the total numbers, have actually gained market share in most of all the major channels that we're doing business, the large warehouses, the broker-dealers, et cetera. The issue is our sales are actually up on a gross basis.
It's down net for some of the things that I just mentioned, a few others I will talk about. On a relative basis, because the industry sales have slowed a bit, we've actually gained market share. We're up a bit. It's not as much as we would like, having said that, I think you've mentioned that the industry is a bit down. We think over time, we are establishing ourselves, our productivity per wholesaler, the number of products we're sending, then the number of million-dollar producers we're hitting is all growing. That's a big positive for us. That's one that we're working hard at. The U.S. Trust and Zurich are two of our major areas of outflow. Zurich, on average, is about $4 billion a year.
What that means is if you look at the asset base, it stays relatively the same over the years since we acquired Threadneedle from Zurich. We renew that agreement and partnership over a number of terms. What's happened is you have natural outflow from retail clients drawing down on their annuities and other things that they're invested in. You have, this year, they sold an annuity business, so it was about a $2 billion block that went out. With that, however, based on replenishment, asset appreciation, et cetera, the assets under management stay relatively a constant. That's one outflow that you'll always see in us and when we talk about particularly Threadneedle. In the U.S., we have a similar thing with U.S. Trust.
What's happening is when we purchased the business from Bank of America, as you remember, Bank of America had their own in-house asset management group. They had a mutual fund group, and they also had managing some of their individual client accounts, SMAs, other things such as that. With that, we're never going to have the extent of the proprietary activity that they once had when it was all an in-house shop, as they continue to change and adjust their architecture. We still maintain a very strong base of assets. If you look at just that natural progression, it'll be a few billion a year. We estimate it to be $3 billion-$4 billion a year, just that you would say we're maintaining good share, we're actually having more sales, et cetera, but as there's a natural flow, that's what will happen.
The only thing affecting that more recently is Bank of America or U.S. Trust has decided to take some of their collective trust business and some of their IMA business on fixed income product back in-house. They feel that they could manage that, and they're doing that right now. That resulted in a few billion in the third quarter. A few more billion will come out here. To us, it's a very low-fee business. It's not a lot of BIPs, and it's a large separate account type of area with collective trust management on one end and the IMA on the other. That will probably continue through the first and second quarter to some extent. Again, this is low-fee business for us. You never want to lose anything, but that's really what it is.
After I think we get through that, we'll be back to a more normalized, what I would call rebalancing that occurs there. It's still a very strong client relationship, a lot of good assets under management, and most of the fund assets that actually have the higher fees are staying in place.
Thanks for that. On the third-party distribution channel side, that's been a big focus area for you guys over the last couple of years. You felt like you or Columbia was underrepresented in a lot of wirehouses, and you spent a lot of efforts trying to kind of get to where you need to be. Do you now feel like, and I know you mentioned you feel like your market share has actually gone up over the last couple of quarters. Do you feel now you have a kind of fair share of the shelf space that's available to you, or there's still a lot more work that needs to be done? From outsiders kind of looking in, thinking about the opportunity for Columbia products, should there be another kind of maybe a leg up.
I think there should be another leg up. I think, for instance, what we're doing is establishing ourselves on those platforms. We're starting to get more advisors aware. We're starting to hit the right type of advisors that actually have the larger accounts, et cetera. I think the Columbia product is starting to register. We're doing a lot more now on our branding, on our marketing. We're doing a lot more on a product, and what we should do, and how that relates to what the advisor is trying to satisfy in their books. We've actually changed the entire leadership team that we brought on some really good experienced people that I think will actually help that to get to the next level. I'm just saying to you, I think we're starting to see some early green shoots of where we're making some dent.
We can see progress in it. We can see a pickup in activity and relationships, I think we now have to build upon that to really get to even more tonnage.
When you think about the product that you offer today, the one trend we continue to see in the industry is that the biggest source of pressure is really taking place in a more kind of traditional style, box-oriented mutual fund. Like U.S. domestic equity-oriented, large cap core type of product. Columbia has a significant amount of presence in that product category right now. Do you think that, A, are you too large in that product? B, do you think you have enough other products that are in the position to gain assets, whether it's multi-assets, whether it's some of the less of a benchmark-constrained product set?
I think I'll answer yes to both. I'll say this In our larger growing product base in, let's say, large cap equities, we see and have seen a large appetite for some of our higher alpha products. Our Select Large Cap Growth, our Contrarian Core, various products and portfolios like that people are still looking for alpha rather than I think if you're just looking at a plain core product, then you have a bit more of the erosion based on passives, et cetera. I think we've been able to show that we can generate more positive returns. Even though those portfolios are large, we have good talented teams, and that we're garnering good flows there. Of course, it's always now, as you think about moving out, that's why we've invested in the solutions business.
Our risk parity product and some of the other solutions are absolute return solutions, and certain things like that we think will take greater space over time. We've been investing now, putting a number of products. We have a good performance seeding over two and three years now, both domestically and internationally. This will be, to us, an area of opportunity in the future. I don't think people will move completely. I think active management, hopefully, knock on wood, is starting to come back a bit more. I think we can see how the indices are all now not necessarily all going straight up. I think there's a big differentiation based on stock pickers, based on segments, based on the perspective of what is the true earnings power of companies again.
I do believe that that will start to register more and more as we go into a different environment.
All right. Well, let's hope so.
Let's hope so. Right.
Shifting gears a little bit, I was hoping to spend a couple of minutes on DOL. Obviously very topical for pretty much almost every part of retail-oriented financial firm, whether you're an asset manager, a broker, or an insurance company. First, I guess let's walk through the risks and opportunities that you guys see across your segments with the way the rules are written today. Secondly, I'm just hoping to hear an update on what you guys hear from the timing of things. Are there changes still expected to come through, or things that are likely to go through the way they've been written, and I guess when?
Yeah. Let me start maybe with that part of the question first, and then I can work back to the potential implications to us. I think the department has said that they're going to come out probably in the first part of next year, and we don't know if that's the end of the first quarter, beginning of second quarter, et cetera. I would imagine they would try to get something out and established before the administration changes. Having said that, there was so significant of comments and pushback, and what I would call discussion around it that we in the industry thinks that that regulation should be re-proposed, that there should be some significant changes that would then really bring it back for a comment period. Having said that, I would imagine the DOL is not looking forward to doing that or want to do that.
I think they were going to try and will try to continue to push something out there with some adjustments. We don't know the extent of those adjustments. I think if you look now on Capitol Hill, I think there are a lot more people, congressmen, senators, starting to understand some of the issues and implications. I think the industry has woken up more, and we've been a very avid supporter of grassroots efforts out to really reach Washington and let them understand the issues and implications potentially on what the effect that this type of rule would have. I think heads are actually waking up. I think there are a few things happening now.
Not that anyone is a guarantee or will actually occur, but there is a new bill being passed, pushed forward by both a combination Democrat and Republican, to actually establish legislation for a more principle-based best interest standard. If that could occur and there's support for it, that would be, to us, a major positive forward because it will have a much more, what we would call practical understanding of what could apply and how that's related to what the SEC and FINRA does. We don't know if that will make its headway to actually pass, but it's one that is actually drawing a lot of interest from both sides of the house. The second thing that is occurring is there is a defunding rider that's being pushed forth by the Republicans. It has some Democratic support.
It really will depend on how significant based on the negotiations at the end of the year. It's one that is a priority down in Washington that, again, it shows a strong interest in people understanding that this has far-reaching implications. If that doesn't happen or occur in a sense of forestalling or stalling this thing from occurring, I think you probably see something from the department. Again, no guarantees from my end knowing this, but probably sometime in the latter part of the first quarter or second quarter. What are we doing as Ameriprise? Well, we've been studying and really looking at what the department's trying to orchestrate, what they originally proposed, what we think would be prudent changes to it. We have a task force established across the company now looking at all the issues and implications.
How do you work with the Best Interest exemption standard? What do you need to do on disclosures? Is that information even available coming from product participants that have to provide it? I think people sometimes think the department's going to pass something, it's all going to be executed within a number of months and go forward. I think based upon what was originally out there, it's pretty significant on what's required. Not just the extent of disclosures, to even get the information to disclose. Just as a perfect example, one of the requirements was you're supposed to advise a client of what they will pay in all their fees over 10 years in the future. You have to make assumptions which the SEC wouldn't want us to do, meaning how a product would perform looking out. You have to make those assumptions.
You have to figure out the consistency of those. Is it an industry-consistent assumption or not? With that disclosure, you have to then take into account what the client's behavior is going to be. There's a whole bunch of things that you just think about, and you try to say, "Okay, how do I actually go do this?" You'll find some issues and implications. We look at all those various things of what, the how, the who, and we say: How do we actually adhere to it? How do we actually comply with it? We have the capability, we have the technology, we have the people all working against those things. We have the legal resources, the compliance resources doing that.
I just don't know where it's going to come on that spectrum, we already have work on the way to try to figure out what are those issues and implications. There will be a cost. The industry will have a significant cost. We will be part of that industry. We'll overcome that cost. The question is, what does that do to activity, and who can you serve? I would just say this again, and I know we've been hit more than others. When I look at the percentage of my business that's fee-based today, it's much higher than the industry. When I look at the percentage that actually works under our Best Interest plan, it's much higher than the industry. When I look at the type of business we do with clients through a relationship and financial planning and advice, it's much higher than the industry.
In effect, if that's what the DOL is saying they want more of, I actually can be probably more client-focused, and my model really lends itself for it. It doesn't mean there won't be issues and implications, but I think Ameriprise can navigate it. I think we can make the adjustments necessary, and we can handle it. I think the industry is going to be hard-pressed in some areas, whether they be smaller firms, they be independents, et cetera, in how do they invest enough, how do they change their compliance enough
Yeah
How do they adjust for the margins of where there may be some fee-based erosion or revenue erosion. I think Ameriprise could be, over time, a place, it's a destination for people to come. Don't get me wrong. No one wants this. I'm not looking forward to it. I think if it comes, we're going to work on this like we've done in the past to figure out how we comply and continue to build off of that. I think we have a good ability to do that.
Thank you. You just mentioned this, I think consolidation will make a lot of sense in case the rules come through as written. Any of these conversations started to happen already, or is that still too early, even with maybe some of the smaller firms? Again, I know you made a smaller-sized acquisition in the wealth management space earlier this year. Not sure if it was related at all to what potentially could be on the come. Are the dialogues starting to take place already, or is this still too early?
I think there are some firms up for sale these days, more in the independent space. I think the question is, do you actually want to acquire them not knowing exactly what the DOL rule is and also how they would operate and how the advisors would change, if they're not doing the type of business model I'm already doing to adjust. I would just say you'll probably see more of that come about next year, and I think it will open up once we also have clarity about what it is that we really would want to do and how to do it to comply. I'll give you one other thing just as a background, and again, it's just more to say Ameriprise's capabilities. We looked over the last three years in the broker-dealer world, the retail world that we play in for our Ameriprise advisor business.
Over the last three years, and again, knock on wood, you never know what the world heralds, but we had about $2 million in fines, regulatory issues, et cetera. The high end of the industry with some of the larger players was up to $200 million. The average for some of the independents was tens of millions. Again, we have one of the largest houses on the street, and it just goes to show you the type of structure we put in place, the type of compliance, the supervision, the disclosures. Again, you can't control every advisor and everything they do every day, but you can put processes and methodologies and supervision in place that can help that along or minimize it to the extent you can. Again, I'm not necessarily looking forward to the partner.
I think sometimes government has a bit of an overreach, we agree with the best interest standard. We agree that for the retirement market particularly, people need good advice. They need to be worked on in a way that can actually add value to their portfolios. People also need to know that to be in this business, there's a cost to doing it and a cost for people to actually serve. I think from that, if we can figure out that balance equation with the government, I think it would be a win-win.
Yeah. This feeds into my next question a bit. When we think about the capital return story, again, as I said, been one of the best across many sectors, the buyback continues to be pretty robust, you guys picked up the pace a little bit more recently. Questions that we get a lot, and I'm sure you and Alicia and the IR team get a lot as well, is you still have $2.5 billion-plus of excess capital. You don't really dip into it, and you're obviously returning 100% of earnings or more. The question comes up, why not do even more?
Given the pullback in the stock and given the opportunity set that you see today, both on the M&A front, and I'm not sure if that's part of that, just saving a little bit of cushion in case there are opportunities in the wealth space you could pursue. What would make you get a little more attractive on the buyback here?
Walt could complement what I'm saying. We have increased our buyback over the course of the year again, so we are returning much more than earnings between the buyback and the dividend. We still have a strong capital position. We're still generating capital, so I'll let Walt comment. The point I'll make first is that we do want to have some of our capital that we can acquire. We do believe that the landscape is changing a bit. We do think that prices are coming back into more appropriate premiums or valuations. We do think more things will be freed up as people start to think about what their world is and what they want to have as core, and whether they can be successful.
I do believe we have established a good global platform that we can definitely add assets to, and we can complement many of the things we're doing with some other capabilities. I will be very clear with you. I definitely do want to hold some cash, not because I don't want to return it, but because I want to use that for some inorganic growth.
Is that more on the wealth side or the asset management side?
I would say it's probably a bit more on the asset management side. I think as the change is occurring with the DOL, then there may be some other things that change that we would probably get more acquisitive in.
Okay. Makes sense. Walter, anything to add?
Yeah, the only thing I'd just add is our capital position is probably the strongest it's ever been. As we look at our risk and our appetite and our tolerances as we explore the landscape, our ability and generation of capital is extremely strong. Certainly, our ability to navigate, looking at the various stress scenarios. We have the capability, like Jim said, it's now looking for the opportunity.
Okay. We have a couple of minutes for the audience if there are any questions. This is the time to ask.
There's a question up there.
Yep.
Thank you. Can you just talk about the outflows that we are seeing from sovereign wealth funds as to what their positioning is? Are you seeing any sign of accelerated outflows or kind of an abatement of that?
I think I won't talk about any particular clients or thing. What I would say is that we have seen some institutions lightening up or going to free up asset for liquidity reasons. We had a few billion of that in the third quarter. We probably will see a continuation of a little bit of that in the fourth quarter. Nothing, to me, to say that it's accelerating at this point in time, I think. Having said that, you never know. I would just say we were impacted, but I think there are many others that were impacted more significantly than us. I would be very clear, the portfolios that they were in were actually some of the best performing, so it wasn't around that we lost assets to something else. It wasn't a reallocation. It was more freeing up for liquidity reasons is our understanding.
Okay. I have one more, if I may. When we think about the collection businesses that you guys have today, the one segment that tends to come up a lot is the protection and auto home in particular. When we think about the rationale of keeping that business as part of Ameriprise as a whole, walk us through again what that is and what would make you reconsider that.
I think one of the things I would say is we feel that the business that we do have, it's a very good affinity type model. It's one of the largest out there. It's been always rated high. It's on the top of the charts for a major reviewer regarding client satisfaction, and it hits number 1 on the charts in our largest market. It is based on long-term relationships, whether they be Ameriprise or other major institutions. It is a direct model, so it's a lower cost to provide in that regard.
I think what we've had experienced is a bit more radical changes that had occurred in the retail market, where people got a bit more aggressive in certain areas, and there's also been a pickup in sort of everything from claim litigation to the perspective of bodily injury, and even now salvage values going down because of the price of commodities. All of that has come to fruition, and we've been hit. I think we have a lot of good work on the way to get the business back to the type of performance metrics that we once had, the margins, the return. The business growth can still be there. One of the biggest issues for many competitors is growing. We have the ability to get the growth.
We have to put in place a number of more aggressive means by which you can manage that growth, the underwriting, the pricing, getting a lot more differentiated based on individual small cells and understanding what you got to do in the claims management. All those things are clearly on the way. We see some very good progress. It takes time to work through the book and get to that point. One would say, okay, you have an asset you've invested in many years. You actually got good returns for many years. You have a period of time that it's underperforming. I think the company can carry that. It's not as though I'm in need of cash right now.
If we get that business back to the type of performance levels we see, that would be reasonable and appropriate for a very good model like that. I think the value of that business will go up tremendously. That always gives us degrees of freedom at that point in time. I think the best thing for shareholder value creation is for us to get that business back to the right performance metrics. If there was a great desire and need for extra cash right now, we could evaluate it. That's not the point of what we think. It's a good diversifier, but it's not core. I think the value creation is what we're doing that will get even greater value over the next year or two. You have anything?
No.
Okay. Great. Okay. I think we have one more question right here.
Hi. Obviously, your demographic you serve is an older demographic, $500,000-plus in investable assets. How are you thinking, or are you thinking at all about the Millennial generation, the HENRYs, the high-earning but not yet rich segment, and the changes that are happening there in terms of delivery, the robo-advisor, which I guess goes contra to the FA model?
It's an excellent question and one that we're very hard at work and focused on. If you go back to how we built this business over the years, even when it was the IDS company, it was all about accumulating for retirement. That is still the game stakes for a lot of our advisor activity. What we're doing right now is because of the success that we've had in our Confident Retirement approach for those people transitioning to retirement, we've gone out and we found that for those people accumulating in their early 40s all the way through their 50s, et cetera, before they get to the stage of thinking about that transition, they are very interested in this approach. Very clearly, that is one of the big areas that we have, and we're coming out and rolling out through a testing that was very successful.
We call it a Confident Retirement wealth builder approach. I think that's one of the things you're going to see us position much more strongly in the marketplace, and it's for the Generation X and Y and the Millennials coming along. It's not necessarily focused on 20-year-olds that really have no money or no cash, but it's really to those people starting to save and starting to think about their life goals from buying that home to the second home to really saving for their retirement plan. You're really talking more that we think our primary focus is probably late 30s, early 40s, all the way through that transition period of the late 50s.
Okay, great. We'll wrap it up there. Thank you both very much.
Thanks.